A joint input costing $500 results in four distinct products at the point of split-off. Products J, K and L are main products, and product M is a by-product. Relevant data follows: $\begin{array}{l}
&\text { Sales Value }&\text { Separable }&\text { Sales Value After }\
\text { Product }&\text { at Split-Off }& \text { Cost } &\text { Further Processing }\
\text { J (main) } &\$200&\$100&\$400\
\text {K (main) }&300&200&600 \
\text {L (main) } &100&-&-\
\text {M (by-product) }&20&10&40
\end{array}$

If the revenue from Product M is recognized at time of sale, at what cost will it be inventoried before further processing?
A) $0
B) $10
C) $20
D) $30

Question

A joint input costing $500 results in four distinct products at the point of split-off. Products J, K and L are main products, and product M is a by-product. Relevant data follows: $\begin{array}{l}
&\text { Sales Value }&\text { Separable }&\text { Sales Value After }\
\text { Product }&\text { at Split-Off }& \text { Cost } &\text { Further Processing }\
 \text { J (main) } &\$200&\$100&\$400\
 \text {K (main) }&300&200&600 \
 \text {L (main) } &100&-&-\
 \text {M (by-product) }&20&10&40
\end{array}$

If the revenue from Product M is recognized at time of sale, at what cost will it be inventoried before further processing?
A) $0
B) $10
C) $20
D) $30

Quizplus · Accepted Answer

By-products are typically inventoried at a nominal value or at net realizable value if they have a minor sales value, and their costs are not usually allocated from the joint costs. Since the revenue from Product M (the by-product) is recognized at the time of sale, its inventory cost before further processing is $0.

A Joint Input Costing $500 Results in Four Distinct Products